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Mr. Matthew Taylor: The right hon. Gentleman speaks with his usual eloquence and charm. He referred earlier to the trend in unemployment continuing on a downward path. There was another trend: the trend in projected taxation, which his Chancellor had announced and was printed in the Red Book. That showed taxation continuing to rise after the general election as a proportion of GDP--it was slightly above the present Government's projection--to close the very deficit that the Government have closed in that way.

Mr. Major: I give the hon. Gentleman exactly the same answer that the Chancellor would give him. If I had said to the Chancellor that the Red Book projections show taxation rising in future, he would have said, "These are stylised projections based on unchanged policies." Of course, they change with each successive Budget. That is why I referred to the tax burden as it is now, not as it is projected by the Chancellor in future. I am grateful to the hon. Gentleman both for his kind words and for letting me make that particular point.

Is there scope for tax reductions now? The Chancellor clearly thinks not and had much pre-election fun rehearsing his hustings speeches in village halls throughout the country, but there is clearly scope for tax reduction to reverse the Chancellor's raiding of the net personal incomes of millions over the past three years.

My right hon. Friend the Member for Kensington and Chelsea (Mr. Portillo), the shadow Chancellor, is searching for savings throughout Whitehall. Good luck to him. It is an extremely good thing for him to look for, but, although it is wise always to see where prudent savings could be made, he could justify his proposed tax cuts simply by saying that he is reversing just a part of the sheer scale of the economically damaging increases that the Chancellor has piled upon the electorate in the past three years.

Some time ago, I heard the Prime Minister--not my favourite programme, Members can understand, but I listen to him from time to time--praising our low-tax economy. Unfortunately, I must have missed the bit where he praised his predecessors for creating it, and the bit where he repented his Government's smash-and-grab raids on people's pockets. The plain truth is that the

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Chancellor, a very agreeable man, has had his hands in the public's pockets more often than the public have had their hands in their own pockets.

In 1997, taxes in the UK broadly, because one can calculate it in different ways, were 6 per cent. below those of our main European competitors. That gap, important for our competitiveness, has shrunk to 2 per cent. and may shrink further because Germany, France and Italy are all embarking on programmes to cut their taxes.

That is potentially important for our competitiveness, our inward investment and for our jobs, on a day when, sadly, many jobs have been lost at Luton. Tax cutting is not simply a matter of putting more money into the pockets of those who have some money already. In my judgment, and I dare say that of my right hon. Friend the Member for Kensington and Chelsea, the weight of tax reductions should be at the lower end of the scale.

It is not greed that demands tax. To a certain extent there is an economic justification for tax reductions, quite apart from the fact that we are not giving people something, but simply taking less of their money away from them.

The Chancellor's move over the past three years from fiscal Scrooge to fiscal Micawber is by no means his only policy change. Once upon a time, as I recall, he was proud to be represented as being in favour of quite early entry to the euro. I understand from his aides, that now, to judge from briefings against the Foreign Secretary and the Northern Ireland Secretary, he is not in favour. Of course, those briefings could be personal rather than policy--one never knows with the Cabinet--

Mr. MacShane: The right hon. Gentleman knows about that.

Mr. Major: Indeed I do, and that is exactly why I say it. However, it is nearly Christmas, so let us make the generous assumption that it is policy that activates the Chancellor and not a wish to undermine his colleagues, which is always an unattractive trait in senior politicians.

The Chancellor now favours delay in entry to the euro. The time is not yet right. One might perhaps characterise his position as wait and see. I think that he is right about that. When they were in opposition, the Prime Minister and the Chancellor roundly condemned that policy, but in government they have warmly embraced it. Indeed, wait and see appears now to have become a rather venerable old gent much loved by nearly all political parties.

The Government wait and see. The Opposition wait and see--albeit for a rather longer time. Entry into the euro rightly provokes great debate. Unfortunately, for many years it has been inadequate debate. Some hon. Members see a new currency as a child of Beelzebub while others regard it as a benign inevitability. It is, in fact, neither. Personally, I disagree with both the "go in now" brigade and the "go in never" brigade. We should measure United Kingdom political and economic interests, which are not yet clear--the Chancellor is right about that--and make a decision only when they are. It could take some time. After the election I shall not be in the House to be told

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that I am wrong, but I do not believe that any Government will enter the euro in the next Parliament and in my view nor should they. I would actively oppose premature entry.

Mr. Nigel Beard (Bexleyheath and Crayford): What is the difference between the policy that the right hon. Gentleman has just outlined for entry to the euro and the established policy of the present Government?

Mr. Major: The established policy of the present Government is very familiar to me for it was mine long before it was theirs, so it is hardly surprising if I have a certain degree of affection for waiting to see whether it is the right policy before deciding upon it. A more accurate question might have been to invite the Chancellor to explain why, two years after the euro came into being, he still adopts the policy that he criticised so harshly when I sat on the Government Front Bench three years before the euro.

Mr. Miller: He is not listening.

Mr. Major: Of course he is not listening; he does not want to hear this and that is perfectly all right.

Mr. Miller: Will the right hon. Gentleman give way?

Mr. Major: The hon. Gentleman will probably defend the Chancellor, but I do not think that the Chancellor needs defending. He is big enough to look after himself.

Mr. Miller: Just for completeness, so that we know exactly where the right hon. Gentleman stands, is he in favour of a referendum so that the people can decide?

Mr. Major: I actually said, in government, that there should be a referendum on the euro. Once again, the present Government gave that commitment because they inherited it from me. That is my position on a referendum, but if in the next Parliament there is concurrence that there will be no decision to enter, it is painfully evident that there will be no referendum.

The Government are allegedly preparing for entry if--and it is a big if--they judge it to be in our national interest. If that is the case, and if their position is not simply a public relations posture, they must consider some serious questions. However, they have not given us their judgment on those serious questions. I do not know the Chancellor's view on the debate. For example, how does he think that the pound will fare in future alongside the dollar, the euro and the yen? Does he worry about the very large capital outflows from the eurozone to the dollar zone? Why does he think that it is happening? What does he think is happening within the eurozone following the birth of the new currency, albeit too early and certainly in the wrong conditions--not remotely the conditions that were agreed at Maastricht some years ago?

It seems to me, as an observer, that the euro has accelerated structural change in continental Europe. If that is so, we need to consider whether the proposed tax reforms in Germany, accompanied by the proposed pension reforms there and the anticipated balanced budget there in about four years' time if the Germans hit their targets, will affect us and if so how?

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We also need to consider the implication--as it is critical to the United Kingdom--of the huge growth of mergers and acquisitions in France especially, but also across Europe. If the Government are leading the debate on the euro, what do they think about all those and 50 other issues that the Chancellor and I and all my right hon. and hon. Friends could easily set out as being crucial for discussion and consideration before any rational judgment should seriously be taken to take us into a single currency?

Some oppose it on principle and others do not. Most people probably wish to know whether it will have a benign or a malign effect on the British economy. We cannot know that without a proper debate on all those issues. I wish that we were having that debate and I wish that the Chancellor of the Exchequer would lead it

The Chancellor of the Exchequer is better placed than any other politician to lead that debate, so what does he think? How does the Chancellor think the unification of the continental financial markets will impact on our own financial markets and what will it mean for future policy? Here is another illustration of an issue that is far beyond the often rather superficial arguments for and against the euro and one that we genuinely need to examine and consider before we make a decision. It is all relevant to our national interest. Where is the debate on all this so that we can make a rational judgment?

We have time. As I said earlier, I do not favour entry in the next few years. I do not think that it would be wise and I would not vote for it. In fact, I would oppose entry in the next few years, but we have to consider that the world around us may be changing and we need to look at that changing world and judge what it means for us.

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